New York.- (GreekNewsOnline, PRNewswire, Reuters)

Oilfield services provider Baker Hughes Co on Friday, May 1^st, agreed to sell its Lufkin rod lift unit to private equity fund manager KPS Capital Partners for an undisclosed amount.

Oilfield service providers, already grappling with slowing spending from producers, are further hard pressed as a recent plunge in oil prices has forced their customers to cut budgets drastically.

Reuters had reported earlier this year that Baker Hughes had retained advisers to sell the rod lifting business and a few others, and that the unit would likely be valued in the $200 million range.

Lufkin provides so-called rod lift gear that help in boosting output from oil and gas wells.

The deal, expected to close mid-year, includes Lufkin’s brand rights, facilities, intellectual property and personnel which will be converted into an independent company. The unit’s power transmission business is not included in the deal and will remain part of the Baker Hughes portfolio.

Lufkin was founded in 1902 and acquired in 2013 by General Electric’s Oil & Gas division. The division subsequently merged with Baker Hughes, Inc. in 2017. 

Lufkin, headquartered in Missouri City, Texas, is a leading global provider of rod lift products, technologies, services and solutions, including automated control and optimization equipment and software for rod lift equipment to the oil and gas industry. With over 100 years of industry leadership, Lufkin manufactures a complete line of surface pumping units, downhole sucker rod pumps and automation systems in six manufacturing and assembly facilities worldwide. Lufkin has an extensive global service footprint that operates in every critical rod lift market in the world.

Michael Psaros, Co-Founder and Co-Managing Partner of KPS, said, “We are excited to create an independent Lufkin. KPS will build a successful energy platform on the foundation of Lufkin’s legendary brand name, unparalleled reputation for reliability, superior technology and global footprint. The historic dislocation in current global and domestic energy markets has created an extraordinary investment opportunity for an investor like KPS. KPS Partner Ryan Baker will lead a team to acquire complementary technologies and products that serve the upstream sector of the energy industry in partnership with Lufkin’s management team. Lufkin will benefit from being a debt-free business with access to the very significant financial resources of KPS.”

Andy Cordova, the rod lift solutions general manager for Baker Hughes, said, “We are confident in our future as an independent company under KPS’ ownership. KPS is an ideal partner with a demonstrated decades-long track record of creating and building industry-leading companies. KPS’ global platform, commitment to manufacturing excellence and significant financial resources will enable Lufkin to accelerate its growth and invest in technology and process improvements for our customers, while enhancing our established reputation for industry-leading technology, quality and customer service.”

Completion of the transaction is expected mid-year 2020 and is subject to customary closing conditions and approvals.

Simmons Energy, a division of Piper Sandler & Co., acted as advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel to KPS and its affiliates. Citi and Tudor, Pickering, Holt & Co. acted as financial advisors and King & Spalding International LLP served as legal counsel to Baker Hughes.

About Lufkin

Lufkin, headquartered in Missouri City, Texas, is a leading global provider of rod lift products, technologies, services and solutions, including automated control and optimization equipment and software for rod lift equipment to the oil and gas industry.  With over 100 years of industry leadership, Lufkin manufactures a complete line of surface pumping units, downhole sucker rod pumps and automation systems in six manufacturing and assembly facilities worldwide.  Lufkin has an extensive global service footprint that operates in every critical rod lift market in the world.  For more information on Lufkin, visit www.bhge.com/upstream/production-optimization/artificial-lift/rod-lift-systems.

About KPS Capital Partners

KPS, through its affiliated management entities, is the manager of the KPS Special Situations Funds, a family of investment funds with approximately $11.7 billion of assets under management (as of December 31, 2019).  For over two decades, the Partners of KPS have worked exclusively to realize significant capital appreciation by making controlling equity investments in manufacturing and industrial companies across a diverse array of industries, including basic materials, branded consumer, healthcare and luxury products, automotive parts, capital equipment and general manufacturing. KPS creates value for its investors by working constructively with talented management teams to make businesses better, and generates investment returns by structurally improving the strategic position, competitiveness and profitability of its portfolio companies, rather than primarily relying on financial leverage. The KPS Funds’ portfolio companies have aggregate annual revenues of approximately $8.4 billion, operate 143 manufacturing facilities in 26 countries, and have approximately 28,000 employees, directly and through joint ventures worldwide (as of December 31, 2019). The KPS investment strategy and portfolio companies are described in detail at www.kpsfund.com.

Michael Psaros

Michael Psaros is a Co-Founder and Managing Partner of KPS Capital Partners, LP, and a member of its Investment Committee and Management Committee.  KPS Capital Partners, LP is the manager of KPS Special Situations Funds, a family of private equity funds with approximately $11.7 billion of assets under management (as of December 31, 2019) focused on making controlling equity investments in manufacturing and industrial companies across a diverse array of industries, including basic materials, branded consumer, healthcare and luxury products, automotive parts, capital equipment and general manufacturing.

Mr. Psaros and the Partners of KPS have successfully developed and executed a proprietary investment strategy of creating new companies to acquire assets or businesses from large corporations, businesses owned by families or entrepreneurs, and businesses presented for sale in connection with financial restructurings, including companies owned by former creditor groups.  KPS then transforms these businesses into independent, world-class, industry-leading enterprises by structurally improving their strategic position, competitiveness and profitability.

The KPS Funds’ portfolio companies have aggregate annual revenues of approximately $8.4 billion, operate 143 manufacturing facilities in 26 countries, and have approximately 28,000 employees, directly and through joint ventures worldwide.

Mr. Psaros currently serves on the Board of Directors of the following KPS portfolio companies: Autokiniton Global Group, C&D Technologies, DexKo Global, IKG, Life Fitness, Howden, TaylorMade Golf, and Winoa. In addition, Mr. Psaros previously served on the Board of Directors of 29 former KPS portfolio companies.

Prior to joining its predecessor and creating KPS in 1997, Mr. Psaros was an investment banker with Bear, Stearns & Co., Inc.

He received a B.S.B.A. in Finance from Georgetown University and attended Sophia University in Tokyo, Japan.

Mr. Psaros serves on the Board of Directors of Georgetown University.  He also serves as the Vice Chairman of the Executive Board of Advisors of Georgetown University’s McDonough School of Business and the Board of Advisors of the Georgetown University Center for Financial Markets and Policy.  Mr. Psaros and his spouse created “The Michael and Robin Psaros Endowed Chair in Business Administration” at Georgetown University’s McDonough School of Business in 2013. 

Mr. Psaros is an Archon of the Ecumenical Patriarch, Order of St. Andrew, where he serves on its National Council. He is a founding member of FAITH: An Endowment for Orthodoxy and Hellenism; serves on the Board of Trustees of The Leadership 100 – Advancing Hellenism and Orthodoxy in America, and the Executive Board of The Hellenic Initiative. Mr. Psaros is the Vice Chairman of Friends of  St. Nicholas, the organization responsible for constructing the new St. Nicholas National Shrine at Ground Zero.  He previously served as the Treasurer of the Greek Orthodox Archdiocese of America and served on its Executive Committee.  He is the recipient of numerous awards from national Hellenic and Orthodox organizations.